R&D Subcontractors

Changes brought about under Finance Act 2019 to the new upfront notification requirement is likely to cause administrative challenges. Companies should keep records of notifications sent in the event of a Revenue audit.


To claim the credit for costs incurred by a claimant company in engaging a subcontractor to carry out R&D activity on its behalf, the claimant company must notify the sub-contracting party in writing that they may not make a claim for the R&D credit for these purposes.

The purpose of the notifications procedure is to eliminate a situation where two different companies are claiming the R&D tax credit for the same costs.

Before the recent introduction of the time limit for subcontractor notifications, there was always a risk of two companies claiming the R&D tax credit for the same costs.  

The below example sets out how this came about in practice:

  • Company A engages a subcontractor, Company B, to carry out R&D on its behalf;
  • Both companies have a financial year-end of 31 December;
  • Company A claims the R&D tax credit on its corporation tax return for the year ended 31 December when filing its return, the following September. Company A sends a notification to Company B in November to advise that it has claimed the R&D tax credit for the subcontracting costs provided by Company B. However, Company B had already claimed the R&D tax credit on its own corporation tax return which was filed in July. Therefore both companies have claimed in respect of the same R&D costs.


Previously, there was no time limit set out in the legislation as to when this notification should be made.

An amendment introduced by Finance Act 2019 requires claimant companies to notify subcontractors in advance of every payment or on the date the payment is made where they might be claiming the R&D tax credit on that payment.

This change became effective from 22 December 2019, the date that Finance Act 2019 was signed into law.

Going forward, failure to notify subcontractors in advance of every payment may result in Revenue seeking to disallow some, or all the outsourced R&D expenditure included your company’s R&D tax credit claim.

Where the outsourced activity is undertaken by a person who could not claim the R&D tax credit (for example an individual, or by a non-resident 3rd party which does not have a branch in Ireland), then Revenue will accept that a notification is not required.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars corporate tax team below:

Staff Member




Gerry Vahey

Tax Partner


01 449 6423

John Burke

Assistant Tax Manager


01 512 5571


February 2020